Overview of container logistics and maritime transport

Maritime transport and maritime logistics

Maritime freight transport refers to the movements of cargo (or shipment of goods) between ports via waterways. Maritime transport is regarded as the backbone of global economy and global trade as the majority of world trade is carried by waterways. Lloyd’s Marine Intelligence Unit conducted a yearlong analysis on the united nation (UN) trade foreign data for 2006 covering over 1,000 commodities and 250 countries. Their research indicated that 75% of global merchandise trade by volume (in tonnes) or 60% by value (in US$) was transported by sea (Mandryk 2009). More recently, United Nations Conference on Trade and Development (UNCTD) stated that in 2017 around 80% of global trade by volume or 70% by value was carried by sea and handled by ports (UNCTAD 2018).

The term, maritime transport, is often used interchangeably with shipping. Vessel operations and port operations are essential activities to enable shipping. There are over 50,000 merchant vessels shipping various types of cargo internationally. Shipping cargo can be broadly categorised into three types: dry, liquid, and specialised. Each of them can be further divided into subcategories. Dry cargoes include bulk, general and breakbulk, containers, reefer, and Ro-Ro. Liquid cargoes include oil-based products, chemicals, and liquefied gasses. Specialised cargoes include livestock and heavy-lift, and project cargoes. Maritime freight transport can then be classified into various shipping sectors according to the types of cargo carried by the vessels. The major shipping sectors include dry bulk carriers, oil tankers, general cargo carriers, and container ships. Container ships account for 13% of world fleet in terms of deadweight tonnage. However, according to World Shipping Council, container ships transport about 60% of seaborne trade by value, which amounts over US S4 trillion worth of goods annually. There are over 1,000 ports in 200 countries in the world open to container ships. Containers handled by ports worldwide in 2018 were 785 million 20-foot equivalent units (TEUs). The importance of container shipping is evidenced by the facts that: (i) container ships occupy low market share (13%) of carrying capacity among all shipping sectors but carry the largest market share (60%) of seaborne trade value; (ii) container shipping is the fastest growing sector in shipping in the last two decades with more and more cargo being containerised; (iii) container shipping is regarded as the world’s first truly global industry that is able to achieve integrated end-to-end supply chains (www. worldshipping.org).

Logistics has been defined from various perspectives. For example, from the material inventory’s viewpoint, logistic is the “management of materials in motion and at rest”. This definition emphasises the flow and storage of materials in the process. From the customer’s viewpoint, logistics can be defined as getting the right product, to the right customer, in the right quantity, in the right quality (condition), at the right place, at the right time, and at the right cost. This definition emphasises on delivering what customers require in an appropriate way. The Chartered Institute of Logistics & Transport defines logistics as “the time-related positioning of resources”, which can be interpreted as the allocation of resources over time and space. Probably, the most widely used definition of logistics was given by the Council of Logistics Management (CLM): “the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements”. This definition may be interpreted from three aspects. Firstly, logistics includes a range of actions such as strategic/tactical/operational planning, the execution of the plans, and the adjustment of the plans during the execution. Secondly, it specifies the scope of logistics management including the flow and storage of goods, services, and related information from the origin point to the consumption point. Thirdly, the definition states that the objectives of logistics management should focus on efficiency, effectiveness, and meeting customer requirements.

Logistics includes or is associated with a wide range of activities such as order processing, inventory control, forecasting, purchasing, production planning, transportation, warehousing, packaging, material handling, site location, and customer service. However, the primary components of logistics are transportation, warehousing, and inventory. Although logistics activities have existed for a long time, they were rather fragmented and managed separately. As a scientific subject, logistics management was relatively new and emerged in the 1980s. The newness of logistics subject may be understood from two concepts. The first concept is that logistics emphasises the coordinated management across different functions (e.g. purchasing, raw material delivery, production, storage, product distribution, and customer service) and multiple entities (e.g. supplier, manufacturer, and customer). The second concept is that logistics adds values to products or services from the customer’s perspective. According to the utility theory, there are four values of products to customers: form, time, place, and possession. Logistics adds time and place values in products mainly through transportation, inventory, and information flows. More specifically, transportation brings the product to customers or has it in a convenient place to ensure the product is accessible to customers. Holding inventory of products is to make sure that the product is readily available when customers need it (Ballou 2004).

Maritime logistics results from the convergence of maritime transport and logistics management. The rationale and the need for such convergence may be explained by the following facts: (i) both concepts concern the physical flows of goods and emphasise on the integration of transportation activities; (ii) the objectives of ocean carriers in maritime transport (such as cost reduction, high utilisation of vessels, and on-time delivery) are largely consistent with the objectives of logistics (i.e. cost efficiency, service effectiveness, and customer satisfaction); (iii) shippers, as cargo owners and the ultimate customers of maritime transport, tend to require goods to be delivered at right time, to right place in right condition, which are essentially the same as the logistics goals. These facts and phenomena lead to the emergence of maritime logistics by embedding maritime transport into the logistics context. In that sense, maritime logistics refers to the logistics process involving seaborne transport. Specifically, based on the logistics concept given by the CLM, maritime logistics can be defined as the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of destination involving seaborne transportation to meet customer requirements.

Maritime logistics distinguishes from maritime transport in two aspects: the focus point and the managerial functions (Song and Panayides 2012). In terms of the focus point, maritime transport emphasises on the management and performance of individual functions associated with seaborne transport. It mainly takes the ocean carrier’s perspective. Maritime logistics emphasises on the management and the performance of the entire system covering all activities associated with the logistics chain. Therefore, maritime logistics takes multiple logistics chain members’ perspectives, particularly the shippers’ perspective that cares more about the overall performance of the supply chain instead ofjust the seaborne transport leg. In terms of the managerial functions, maritime logistics extends maritime transport beyond the maritime segment. Seaborne transport is only part of the maritime logistics system. Maritime logistics involves other activities such as consolidation, storage, warehousing, inventory management, inland transport, packaging, equipment repositioning, repairing, and maintenance, which are largely not considered in traditional maritime transport.